A recession is a scary term. It is associated with despair, poverty and insecurity. Imagine living a comfortable life, managing your commitments well and due to an economic turn of events, your livelihood together with that of your family becomes threatened. The worst part is that this happened on a global level, not too long ago. The last major economic recession took place in 2008 and brought several businesses and individuals to their knees. Whilst an economic dip is indeed scary, a recession is of a totally different level. In this article, we will discuss some of the signs a recession could be looming.
Businesses performing less well
When businesses start to perform less well, profit and revenue-wise, it may mean that the particular industry may crash. This could be due to different reasons, such an industry’s products may be less in demand or recruiting the right talent may be difficult, or changes in the legislative landscape may bring to the fore certain problems. One example of legislation directly impacting a particular industry may be seen in the gaming sphere, where tighter laws in Sweden are making it more difficult for betting companies to run their businesses.
Job cuts are normally the last resort adopted by companies when incurring a financial loss. This may be severely problematic for those individuals who are terminated and also hits the reputation of the company, with less and less people wanting to ever work there.
Lack of job opportunities
One of the main signals of a recession would be a lack of job openings. Companies would be less inclined to employ people and take on long-term commitments. This lack of opportunities would, in turn, increase the unemployment rate, therefore the chances of poverty and criminality.
Less bank risk appetite
In the anticipation of a recession, banks would be less likely to loan out money. This is due to the fact that they would apply stricter controls to minimise any impact in case incomes decrease. This is done purely for the fact to minimise any potential loan defaults in case of an economic downturn.
One of the signs that a recession is looming can be seen by less demand for practically everything. Just before a recession, there would be fewer business transactions and people would be spending and investing less. Such decreased demand could apply for property, entertainment, business and other investments. The lesser demand would eventually bring forth a spiral of decline where people who need to sell desperately do so at significantly reduced prices. That way, value across the whole board decreases and diminishes.
Could we be in for another recession? Do you see any of the signs?